Angley School in Cranbrook, Kent, has only had a very limited library budget for some years, so when I arrive with a big bag of books from the books desk chuckout cupboard – as part of the Guardian and Observer Book Swap – I am instantly the most popular kid in year seven.

Since the loss of the dedicated school librarian last year, teachers have given up their lunchtimes to staff the library and run various clubs encouraging children to engage with reading.

English teacher Rebecca Alderwick explains: "Funding is an issue, it would be foolish to say otherwise, but teachers here are a passionate and dedicated bunch who do everything they can to pass that passion on to their students."

With lesson time so squeezed by the National Curriculum, putting in the extra hours to make sure the kids do things like enter competitions, follow the Carnegie prize for children's fiction, or just have some quiet time to read, is vital, she said. "The knock-on benefits for the rest of the curriculum are huge, as success in every subject depends to a great extent on the ability to read and understand a huge range of material."

In Thursday's lunch break, there's a regular meeting of avid readers, and as I wait for them to arrive one child streams past me to check whether his favorite hardback is still where he left it on his last visit. Despite the late blooming Indian summer outside, there's no reluctance at being in the library – they immediately crowd around the table of new books and start baggsying the writers they recognise – Michael Morpurgo, Anne Fine – and one girl tells me proudly that she's going to take out four all at once.

As well as discussing the new books, the children have brought in their favorite books from home to swap with their classmates. I explain the idea behind the Book Swap and hand out the Guardian's book plates. We all agree that it's a lovely idea to share the stories we've enjoyed, but the thought of actually giving away favourite books isn't immediately popular, and sombre negotiation ensues.

It's decided that everyone can keep their newly swapped books for two weeks, and then return them to to their original owner. A long swap list is drawn up, and everybody is happy. "Look after it because it's my favorite," whispers Joshua, who is instantly reassured by his classmate. These are certainly kids who appreciate the value of a paperback.

Giggling nervously, one girl tells me that her favourite book once made her so cry so much she had to go downstairs to see her Mum. We all decided that sometimes it's good if a book makes you sad, because that means it has made you realise how life might be for somebody in a different situation to you.

This shared confession is just one illustration of the impact fiction can make on young readers, and the potency of these stories that we read over and over again. Alderwick says it's impossible to overestimate the importance of developing a culture of reading in schools. "If we can harness the enthusiasm of the children who join us in year seven, with a bit of luck and a lot of hard work, we can hook them on books for life.'

As the children file out of the classroom clutching their new finds to their chests, I think that they may just have cracked it.